How Trump's pet deals will hurt international trade with the United States

Trump's trading acumen is being praised by some pundits

Do they have it correct?

The Trump-EU agreement will benefit blue-collar workers. "People can criticize Trump's character all they want," says Nicole Russell, a USA Today columnist, "but the president's ability to negotiate trade agreements that benefit American workers shouldn't be disregarded." Basically, Russell's argument is that the agreement requires Europe to purchase military and energy equipment from the United States. These kinds of items are produced by "blue collar" workers, or those who wear hard hats or use power tools.

Russell's free time must be limited. She might have given this some more thought if she had. First, why should the United States government favor blue-collar workers over white-collar workers? Secondly, huge corporations in the oil and defense industries are also favored in the tariff negotiations. How does that benefit the men who primarily work for small businesses?

Thirdly, policies that ostensibly prefer US industry output with a 15 percent import tariff also call for 50 percent steel and aluminum taxes, which US automakers and ultimately consumers must pay. For the man who needs wheels to get to work, what good does that do?

Fourth, who does she believe foots the bill? Tariffs are more or less a tax that is paid by American importers and then transferred to American consumers. Everyone will pay, whether they wear a white collar, a blue collar, or none at all. Why would anyone? Dogs are exempt from tariffs. inanimate objects don't. The people must ultimately provide all government funding.

Did Trump "achieve the remarkable" somehow?

All of it is illogical. A financial crisis is imminent as the United States faces a £2 trillion deficit. The trade agreements, however, are viewed as a political "win" for Trump.

The Wall Street Journal claims that Trump has "achieved the remarkable: raising tariffs by more than the notorious Smoot-Hawley Tariff Act of 1930, while it appears avoiding the destructive trade war that followed." According to JPMorgan Chase, the United States will impose an effective tariff rate of roughly 15% on its trading partners, which is by far the highest since the 1930s, including the agreement reached with the European Union.

Trump's major trade agreement with Japan is already deteriorating, according to The New Republic, but will the agreements last? US and Japanese officials aren't in agreement about what was agreed upon, according to a Financial Times report. Mireya Sols of the Brookings Institution told the Financial Times that "there are no guarantees on what the actual level of investments from Japan will be" and that "both sides made promises we can't be sure will be kept." With Europe, it's also not quite finalized. Both sides can do a lot to promote more business transactions in the LNG industry, but "neither government has any control over what happens commercially," Fred Hutchison, CEO of LNG export group LNG Allies, told Energy Intel.

According to the WSJ, Trump's leverage over other nations' strong economic and security ties to the US allowed him to secure his deals. However, as those nations develop markets abroad and strengthen their own militaries, "that leverage will wane in the coming years." As a result, the global system will be less stable and less reliant on the US.

The markets are also less steady. Stocks are now even more overpriced, already hovering at the pinnacle of their trading range. More significantly, Trump has increased the price of doing business with the United States. He must have also made people want to avoid trading with it altogether.

Bill can be found at bonnerprivateresearch.com.